SHOULD YOUR CORPORATION BE A BENEFIT CORPORATION (AND WHAT IS A BENEFIT CORPORATION)?

I am sure many of us have heard the reports in print and online media that Millennials are becoming the largest consumer group and that they often choose to spend their money at companies which practice good corporate citizenship.  This includes supporting corporations which put their money where their mouth is by donating services, products or a percent of their profits to underserved communities or other charitable causes.  Think about the company that donates shoes to the underprivileged or a family in a third world country if you buy a pair of shoes from them.  Or, the company that donates a percentage of their profits to a particular charity.  How are these companies set up in their state of incorporation?

Thirty-three states, at last count, have statutes that apply to these so-called, benefit corporations.  New Hampshire has a benefit corporation statute at NH RSA 293-C which took effect on January 1, 2015.  Directors of a benefit corporation are permitted, and may be required, to consider the social benefits of their decisions in addition to profit motives.  Some statutes have been criticized as being too vague and not giving enough guidance to the directors.  New Hampshire requires the corporation to have a material positive effect on society or the environment.  The NH law defines a specific public benefit to include providing low-income or underserved individuals or communities with beneficial products or services; protecting the environment; improving healthcare; or, promoting the arts and sciences.  The statute also has certain reporting requirements which must be met.

The allowance of benefit corporations in New Hampshire is an attractive development for community and environmentally minded business owners.  It enables them to practice their social values without sacrificing the ability to make a profit.  But it is advisable to contact an attorney to set up the corporation and provide advice on the operation of the business.

If you would like to start a benefit corporation or would like to convert your current corporation to a benefit corporation, please contact an attorney in our office.  We offer advice to all types of corporations, limited liability companies and other business entities designed to achieve each client’s goals and needs.